Why Borrow from a Credit Union?
Do you need a loan?
There are plenty of good reasons why you should choose to borrow from a credit union.
- very competitive interest rates
- apply online or at a branch
- interest is charged on the reducing balance of the loan
- you can pay back your loan in several different ways
- loans come with no hidden charges
- there are no penalties for early repayment
Credit unions are not-for-profit financial cooperatives in Wales alone they hold a combined membership of more than 80,000 people and loans amounting to £23 million.
As community savings and loan cooperatives, members pool their savings to lend to other members who need to borrow money at an affordable rate.
Credit unions act in the interests of all members and ensure they don’t take out loans they cannot pay back by assessing their income and, in some cases, how much they’ve been able to save.
In 2019 alone, loans with credit unions are estimated to have saved people in Wales £13m in interest repayments compared to going to a payday or doorstep lender
Interest is charged on the reducing balance of the loan which is important if you want to repay it weekly rather than monthly, because you’ll pay less interest overall.
You can pay back your loan in several different ways, although some credit unions might not offer all methods.
- by making payments face-to-face
- by Direct Debit from your bank account
- through you wages at work: if your employer is a payroll partner with a credit union you can pay back your loan by having money deducted straight from your wages
- through Paypoint. Some credit unions issue Paypoint cards which you can use to pay back your loan at your local shops
- direct payments from your benefits – some credit unions take benefit payments directly, deduct your monthly loan repayment and pay you the rest
Credit union loans come with no hidden charges and no penalties for repaying the loan early.
Worldwide there are over 40,000 credit unions in 80 countries. In Ireland, over 70% of the population belongs to a credit union.
Credit unions in the UK are lregulated by the Financial Conduct Authority and just like banks and building societies your savings are covered by the Financial Services Compensation Scheme (FSCS) up to £85,000 per individual.